The Crawfords Keep Looking For A Unicorn

[ArthurWankspittle]

Her position is obviously salvageable with some sensible advice and prompt action.

True. If she has got 5 years to go, extend it 5 years and make it a repayment mortgage should do the trick without too much pain.

[aesmith]

Maybe 10 years, UK mortgages used to normally be 25 years. That would still be quite a short time to pay off the capital if nothing had been done so far. Also a year of arrears to clear, and I'm going to take a guess that this nonsense was started because she was finding the mortgage a struggle.

[Gregg]

Over here in the colonies, renting out a property you borrowed for as a primary residence is a big no no. I dunno if they can kick you out if you do it 5 years in, but if you buy do it when you get the mortgage it can be Mortgage Fraud and if you make them mad its a felony. Interesting bit though...

The theory is that in 1933 the Government went bankrupt when it stopped using the gold standard to back its currency. Needing a new type of collateral to back sterling, ‘Freemen on the Land’ think the Government pledged the future earning power of its citizens. As a result, they believe that at birth each individual has a secret "strawman" account at the Bank of England or the Treasury which contains several million pounds to represent their future earnings.

The part about 1933 and bankruptcy and ditching the Gold Standard is lifted somewhere from us 'muricuns, because of the Gold Acts of 1933 over here, things that just didn't happen in the UK so you can't make up Sovereign Gibberish about it unless you steal our Sovereign Gibberish, which you're free to do only if you promise to take it all and never send it back.
The Bank of England actually beat us to that, abandoning the Gold Standard in 1931, and not to pick nits but we didn't abandon the Gold Standard in 1933, we just made it illegal for private citizens to own bullion and voided the payment in gold clauses in contracts. We didn't in fact ditch the Gold Standard until 1971 but when did you ever hear anyone saying that? Hell, if it was only in our lifetimes that we became slaves, we might remember it, and the happy days prior to that when houses were free, chocolate didn't have calories and unicorns inhabited all the parks.

[ArthurWankspittle]

Over here in the colonies, renting out a property you borrowed for as a primary residence is a big no no.

It isn't usually a problem in England so long as you tell them up front. You are unlikely to get into legal trouble for it, but the mortgage companies will apply a higher rate as it is seen as a higher risk. And you can be sure they have that right in the small print. Ms W risks having a few points over her mortgage rate added and backdated to the account and there is nothing she can do about it.

[noblepa]

Over here in the colonies, renting out a property you borrowed for as a primary residence is a big no no. I dunno if they can kick you out if you do it 5 years in, but if you buy do it when you get the mortgage it can be Mortgage Fraud and if you make them mad its a felony. Interesting bit though...

When I was a kid, here in Ohio, my parents bought a house in 1957. We lived in it until 1963, when we moved to another county. My parents then rented the house for several years.

I don't know if they ever notified the bank of this change of status, but they never suffered any repercussions. After a few bad tenants and a couple of good ones, plus that fact that we were living 100 miles away, making it difficult and expensive to visit the house to make repairs, they finally sold it.

I agree, though, that there might be a problem if you bought a house with no intention of living in it and neglected to inform the lender. It is my understanding that banks don't like to write mortgages of more than 15 years for rental properties, compared to the 20 or 30 years that are common for residential mortgages.

[AnOwlCalledSage]

Maybe 10 years, UK mortgages used to normally be 25 years. That would still be quite a short time to pay off the capital if nothing had been done so far. Also a year of arrears to clear, and I'm going to take a guess that this nonsense was started because she was finding the mortgage a struggle.

I had a 25 year mortgage and was 15 years into it when I hit no job, no money and ridiculously high payments given my income. They extended my mortgage by 20 years which halved the monthly payments until I got back on my feet again when we reduced the term again to the original end date. By and large UK mortgage companies are quite good and there is a certain amount of legal protection. It would be a refusal to talk to the mortgage company that would have got her in trouble.

[Gregg]

In the US, most banks want you to put 20% cash down on rental property, and especially since the 2008 meltdown they're pretty insistent not only on the 20% cash but that its 20% of the purchase price and not the "appraised value" which everyone was shamelessly playing funny accounting with. Another big no-no here and one that will get you actually prosecuted if they catch you is using some form of government backed program meant for owner occupied homes (VA, FHA, etc...) to buy what you intend to be rental property from the git-go. I think technically if you have a subsidized loan and you run on hard times and decide to rent it out you're supposed to call and tell them at which time they might modify your loan by either/and making you put up enough to reach the 20% of purchase price or increase your rate.

For you imperialists, in the USA a whole lot of people buy their first home at least through one of many government backed loans, FHA allows you to only make a 6% or so down payment, VA loans for veterans allow them to buy with lower or I think even no sown payment. All of them also get lower rates and you can get 35 or 40 year terms sometimes. I dunno if you have such programs over there.

[KickahaOta]

For you imperialists, in the USA a whole lot of people buy their first home at least through one of many government backed loans, FHA allows you to only make a 6% or so down payment, VA loans for veterans allow them to buy with lower or I think even no sown payment. All of them also get lower rates and you can get 35 or 40 year terms sometimes. I dunno if you have such programs over there.

And of course during the housing bubble we had our own round of mortgage 'mis-selling'. Endowment mortgages aren't a thing on this side of the pond, but what we had was worse: interest-only mortgages without an endowment to pay them off, and even 'negative amortization mortgages' where your payments didn't even cover the interest. The stated theory was that since the market would clearly rise forever, you should buy the biggest house your credit would possibly allow, and in a few years the house's value would have risen so much that you could refinance into a more conventional mortgage. But then spoilsports decided to stop buying houses, and the market crashed, and then there was running and shouting.

[Dr. Caligari]

and then there was running and shouting.

Not to mention weeping and gnashing of teeth.

[The Observer]

and then there was running and shouting.

Not to mention weeping and gnashing of teeth.

You left out "...and cursing the darkness."

[Burnaby49]

Happily that collapse didn't cross the border to Canada because the Canadian government had very stringent rules on mortgages and didn't allow all the wild variations you have in the states. Additionally Canadian financial institutions weren't allowed to collateralize and sell mortgages as packages, they had to keep them, so they had a vested interest in lending only to mortgagees who could put down a decent downpayment and who had the clear ability to pay the money back.

[noblepa]

For you imperialists, in the USA a whole lot of people buy their first home at least through one of many government backed loans, FHA allows you to only make a 6% or so down payment, VA loans for veterans allow them to buy with lower or I think even no sown payment. All of them also get lower rates and you can get 35 or 40 year terms sometimes. I dunno if you have such programs over there.

And of course during the housing bubble we had our own round of mortgage 'mis-selling'. Endowment mortgages aren't a thing on this side of the pond, but what we had was worse: interest-only mortgages without an endowment to pay them off, and even 'negative amortization mortgages' where your payments didn't even cover the interest. The stated theory was that since the market would clearly rise forever, you should buy the biggest house your credit would possibly allow, and in a few years the house's value would have risen so much that you could refinance into a more conventional mortgage. But then spoilsports decided to stop buying houses, and the market crashed, and then there was running and shouting.

Back in the 1981 we bought a house via one of those negative amortization loans. It was horrendous. We hadn't overborrowed, based on our income, but lending was so tight and interest rates so high, that it was the only mortgage we could get. One large bank told us that they had not money to lend on mortgages (so much for the theory that banks create money when you sign the mortgage), but, if they did, the rate would be 17 percent.

We were able to refinance within a year or so, but I vowed to never again have such a mortgage.

I think that, by the time of the crash in 2007-8, such mortgages were a thing of the past. The bigger problem was the so-called "liars loans", in which the lender didn't bother to verify the borrower's income. Borrowers would overstate their income to qualify for a larger mortgage than they normally would have. Then, when the value of the house tanked, and maybe they lost their job due to the recession, they were suddenly upside down in their mortgage, owing more than the house was worth.

I don't know if unverified loans have been outlawed by statute, but certainly banks and mortgage companies are being more careful about their lending practices. They're requiring bigger down payments and are being more conservative about how much loan a given income can support. It used to be that they assumed that, even with a small down payment, the value of the house would increase in a couple of years to provide adequate equity. Also, if the buyer defaulted, the increased value would more than cover the amount owed, in the event of foreclosure. Neither of those things is certain these days.

[SteveUK]

There were 2 ways of doing it here. Firstly was the 'self certified' mortgage, when you just said that's what I earn, took the cash, and the consequences are your problem. Then > 100% mortgages, where you needed no deposit and could borrow more than the market price.

There were even some self cert >100pct mortgages. I mean, what could possibly go wrong.

[Siegfried Shrink]

I seem to recall Northern Rock offering 110% mortgages so you'd have some cash to do the place up.
London prices feel like a bubble to me but we will see.

My partner wants to buy a house to let using some spare cash. This reminds me of the tale of the Wall Street banker who sold out when the lift operator offered him stock tips.

[Gregg]

That Wall Street Banker story I often see attributed to he who until yesterday was the most reviled American official ever in England, Joseph P. Kennedy.

We all remember now his kids and grandchildren much more fondly, but the old man was a pretty nasty piece of work and when he was the American Ambassador he was pretty open about his admiration for that little Austrian guy screaming "Make Germany Great Again" who swept to power by promising to deport all the Jews.

I dunno whether Old Joe really said it, though.

[grixit]

The most impressive thing about Joseph P Kennedy was that he got appointed to clean up a messy situation that he'd previously been benefitting from.

[Aegis]

I seem to recall Northern Rock offering 110% mortgages so you'd have some cash to do the place up.
London prices feel like a bubble to me but we will see.

My partner wants to buy a house to let using some spare cash. This reminds me of the tale of the Wall Street banker who sold out when the lift operator offered him stock tips.

I'm sure I saw a couple of places, possibly including Northern Rock, going to 125% loan-to-value. Bit nuts really!

[SoLongCeylon]

Eviction Anniversary Video from Tom:

https://www.youtube.com/watch?v=HFe8VTUimy4

( spoiler alert : nothing new, re hash of old videos )

So Tom, four years on, was it all worth it? Of course not.

[letissier14]

24 mins and 58 secs of the same old crap and still they can't let go.

[Notsogreen]

wow.. At 10:31 they actually accuse the Police of "crimes akin to Genocide"...

AND they had to put the dog down....